The French mortgage market has received many plaudits recently as it is in relatively good shape compared to its ailing Anglo Saxon cousin. Once you look on the inside of the institutions and procedures of many of the banks you might be forgiven for thinking that you had been transported back to the mid 1980s. In recent times, competition has increased for mortgages in France for international buyers and in the past couple of years the first mass market interest only loans were introduced. Now further reform is on the cards as the French economic and finance minister, Christine Lagarde, continues her improvements to the regulatory landscape especially hidden bank charges.
Many international buyers of French property are surprised to find that life assurance is compulsory for all French mortgages. Even more surprising, is that the majority of French banks only allow applicants to use the life assurance recommended by the bank. However, this seems set to change with the Lagarde Reform which is currently going through the French legislative process. The main provision of this project lies in Article 17 which amends Article L. 312-9 of the Consumer Code as follows: "A lender may not refuse to secure another loan insurance contract when the contract has a level of security equivalent to the insurance contract that offers". Other amendments are also being proposed to strengthen consumer rights in this regard and the changes are expected to come into force on the 12th May 2010. This shake up should bring in more competition which is long overdue within the market.
The benefits of this reform will produce real cost savings over the life of the mortgage, with some insurance brokers saying that insurances costs pay go down by over 50 per cent. The minimum typical type of life assurance required for a mortgage in France is against death or total loss of mobility which generally costs €30 per month per €100,000 borrowed which for an average sized loan over 15 years would save over €5000. For more information or to sign up to our newsletter please visit www.athenamortgages.com
Many international buyers of French property are surprised to find that life assurance is compulsory for all French mortgages. Even more surprising, is that the majority of French banks only allow applicants to use the life assurance recommended by the bank. However, this seems set to change with the Lagarde Reform which is currently going through the French legislative process. The main provision of this project lies in Article 17 which amends Article L. 312-9 of the Consumer Code as follows: "A lender may not refuse to secure another loan insurance contract when the contract has a level of security equivalent to the insurance contract that offers". Other amendments are also being proposed to strengthen consumer rights in this regard and the changes are expected to come into force on the 12th May 2010. This shake up should bring in more competition which is long overdue within the market.
The benefits of this reform will produce real cost savings over the life of the mortgage, with some insurance brokers saying that insurances costs pay go down by over 50 per cent. The minimum typical type of life assurance required for a mortgage in France is against death or total loss of mobility which generally costs €30 per month per €100,000 borrowed which for an average sized loan over 15 years would save over €5000. For more information or to sign up to our newsletter please visit www.athenamortgages.com
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